How FinTechs have Fueled ESG in Financial Markets

CJ Emson

NOV 2022

Environmental, Social, Governance: ESG. A phrase which has begun to wash across all sectors as a tide of change. For FinTechs, what change will a shift in corporate attitudes towards reduced environmental impact, more ethical investment principles and greater transparency for the industry translate to? And for those original innovators in the space, what ground is left to be gained?  

FinTech Innovation in Securities Finance

From the earliest occurrences of civilization, the means to record and disseminate information can be traced. Once stone, papyrus and latterly paper were the means of record. The earliest imaginings of the London Stock Market, broadly agreed as the site of Jonathan’s Coffee Shop on what is now Exchange Alley in London’s Square Mile, relied on paper as the mode of means and so it continued for centuries. Only relatively recently in the digital boom years of the 80s did the first digital records begin to supersede less sustainable paper records. 

Recent memory still recalls phone trading and paper tickets and the hurried crush of voices rushing towards a final trade as the close approached. Innovation fueled the move towards greater connectivity from front-to-back office, firm-to-firm and across global time zones. Ready adoption of technology delivering once unthinkable speed and efficiency has doubled down to deliver day-to-day change in the form of advancement from those scratchy long distance phone calls, paper ledgers and physical trade certificates to instant, global electronic trading.  

Paper made paper for the Wall Street Wolves of the day and today, digital markets have grown from valuations of millions to valuations of billions and trillions of dollars of inventory and opportunity as a result of positive impactful change. FinTech has become a pseudonym for progressive, impactful, irreversible change.

Financial Regulation and Financial Markets

The quantum leap into what was once the future of finance to the reality of present-day execution has been monumental, bringing both efficiencies, and additional complexities to the global system. In some markets the rapid advancement of financial markets has, at times, threatened to outstrip the governance and regulation designed to corral it.  

For EquiLend, as a FinTech it is incumbent on us to think faster than we can build, to think bigger than we are, and to address problems with solutions before they are blockers. As technological innovation has progressed globally, we have sought to develop ever more efficient means of execution and delivery in all of our endeavors. The march of change has matched our innovation and as the challenges of 2008 persist to present-day, they have served to sharpen the pen of regulators. The governance we must respond to today – MIFiiD II, SFTR, CSDR, ALD and 10c-1 – form part of this legacy towards more efficient, sustainable markets.  

Societal Change in Corporate Worlds

Attitudinal change has at times struggled to keep pace with the bounding leaps of technological change but thankfully this change is also well underway. Equality for minorities and women; employment opportunities uncoupled from your socio-economic background; openness to flexible work; and active support, advocacy and representation of these values from the top down is increasingly expected in corporate life.  

While some of this change has been powered by a junior workforce more comfortable with their own voice than predecessors, it has been supported by senior figures who see value in the diverse opinions and lived experiences which authenticity at work provides. Good innovation can produce great results, but a community delivers them.  

ESG and Financial Markets

Financial innovation has driven greater and greater positive change for the financial industry and for many established economies so reliant on the power of markets. In current times, as economies have felt at the mercy of the markets with real life consequences for the average citizen, we must ask again what ground is left to gain?  

The ground left to gain is in the next wave of technological innovation delivering greater future offerings. With new tech such as blockchain or distributed ledger comes further advancement of industry, greater economic growth, further financial globalization and fewer barriers to entry and execution and there is no greater frontier than the future.

Who We Are

EquiLend is a global financial technology, data and analytics firm offering Trading, Post-Trade, Data & Analytics, RegTech and Securities Finance Platform Solutions for the securities finance industry. EquiLend has offices in New York, New Jersey, Boston, Toronto, London, Dublin, India, Hong Kong and Tokyo and is regulated in jurisdictions around the globe.